<PAGE> 1
1994
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
TO ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission file number 1-9117
INLAND STEEL INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 36-3425828
(State of Incorporation) (I.R.S. Employer Identification No.)
30 West Monroe Street, 60603
Chicago, Illinois (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (312) 346-0300
<PAGE> 2
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Annual Report for
1994 on Form 10-K:
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS A PART OF THIS REPORT.
1. CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY. The
consolidated financial statements listed below are set forth in the
Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1994, and are incorporated by reference in Item 8
of this Annual Report on Form 10-K.
Report of Independent Accountants dated February 20, 1995.
Statement of Accounting and Financial Policies.
Consolidated Statements of Operations and Reinvested
Earnings for the three years ended December 31, 1994.
Consolidated Statement of Cash Flows for the three years ended
December 31, 1994.
Consolidated Balance Sheet at December 31, 1994 and 1993.
Schedules to Consolidated Financial Statements at December 31,
1994 and 1993, relating to:
Investments and Advances.
Property, Plant and Equipment.
Long-Term Debt.
Notes to Consolidated Financial Statements.
2. FINANCIAL STATEMENT SCHEDULES OF THE COMPANY.
Report of Independent Accountants on Financial Statement
Schedules dated February 20, 1995. (Included on page 27
of this Report)
Consent of Independent Accountants. (Included on page 27
of this Report)
For the years ended December 31, 1994, 1993 and 1992:
Schedule I -- Condensed Financial Information (Parent
Company Only). (Included on pages 28 to 30, inclusive,
of this Report)
Schedule II -- Reserves. (Included on page 31 of this
Report)
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3. CONSOLIDATED FINANCIAL STATEMENTS OF INLAND MATERIALS
DISTRIBUTION GROUP, INC.
The consolidated financial statements listed below are set
forth in Appendix A on pages A-1 to A-13 inclusive, of this
Report.
Report of Independent Accountants dated February 20, 1995.
(Page A-2)
Consolidated Statements of Operations and Reinvested
Earnings for the three years ended December 31, 1994.
(Page A-3)
Consolidated Statement of Cash Flows for the three years
ended December 31, 1994. (Page A-4)
Consolidated Balance Sheet at December 31, 1994 and 1993.
(Page A-5)
Statement of Accounting and Financial Policies. (Page A-6)
Notes to Consolidated Financial Statements. (Pages A-7 to
A-13, inclusive)
4. EXHIBITS. The exhibits required to be filed by Item 601
of Regulation S-K are listed under the caption "Exhibits"
below.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by the Company during the quarter
ended December 31, 1994.
(C) EXHIBITS.
See Index to Exhibits included herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
INLAND STEEL INDUSTRIES, INC.
(Registrant)
By: /s/ Earl L. Mason
__________________________
Earl L. Mason
Senior Vice President and Chief
Financial Officer
Date: June 19, 1995
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<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT Sequential
NUMBER Description Page No.
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<S> <C> <C>
3.(i) Copy of Certificate of Incorporation, as amended, of the
Company. (Filed as Exhibit 3.(i) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994, and
incorporated by reference herein.) --
3.(ii) Copy of By-laws, as amended, of the Company. **
4.A Copy of Certificate of Designations, Preferences and Rights
of Series A $2.40 Cumulative Convertible Preferred Stock of the
Company. (Filed as part of Exhibit B to the definitive Proxy
Statement of Inland Steel Company dated March 21, 1986 that was
furnished to stockholders in connection with the annual meeting
held April 23, 1986, and incorporated by reference herein.) --
4.B Copy of Certificate of Designation, Preferences and Rights
of Series D Junior Participating Preferred Stock of the Company.
(Filed as Exhibit 4-D to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1987, and incorporated by
reference herein.) --
4.C Copy of Rights Agreement, dated as of November 25, 1987, as
amended and restated as of May 24, 1989, between the Company and
The First National Bank of Chicago, as Rights Agent (Harris Trust
and Savings Bank, as successor Rights Agent). (Filed as Exhibit 1
to the Company's Current Report on Form 8-K filed on May 24,
1989, and incorporated by reference herein.) --
4.D Copy of Certificate of Designations, Preferences and Rights
of Series E ESOP Convertible Preferred Stock of the Company.
(Filed as Exhibit 4-F to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1989, and incorporated by
reference herein.) --
4.E Copy of Certificate of Designations, Preferences and Rights
of Series F Exchangeable Preferred Stock of the Company. (Filed
as Exhibit 4(b) to the Company's Current Report on Form 8-K filed
on December 18, 1989, and incorporated by reference herein.) --
4.F Copy of Indenture dated as of December 15, 1992, between
the Company and Harris Trust and Savings Bank, as Trustee,
respecting the Company's $150,000,000 12-3/4% Notes due December
15, 2002. (Filed as Exhibit 4-G to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1992, and
incorporated by reference herein.) --
</TABLE>
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** Previously included in Registrant's Annual Report on Form 10-K for 1994, as
originally filed.
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<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
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<S> <C> <C>
4.G Copy of First Mortgage Indenture, dated April 1, 1928,
between Inland Steel Company (the "Steel Company") and First
Trust and Savings Bank and Melvin A. Traylor, as Trustees, and of
supplemental indentures thereto, to and including the
Thirty-Second Supplemental Indenture, incorporated by reference
from the following Exhibits: (i) Exhibits B-1(a), B-1(b), B-1(c),
B-1(d) and B-1(e), filed with Steel Company's Registration
Statement on Form A-2 (No. 2-1855); (ii) Exhibits D-1(f) and
D-1(g), filed with Steel Company's Registration Statement on Form
E-1 (No. 2-2182); (iii) Exhibit B-1(h), filed with Steel
Company's Current Report on Form 8-K dated January 18, 1937; (iv)
Exhibit B-1(i), filed with Steel Company's Current Report on Form
8-K, dated February 8, 1937; (v) Exhibits B-1(j) and B-1(k),
filed with Steel Company's Current Report on Form 8-K for the
month of April, 1940; (vi) Exhibit B-2, filed with Steel
Company's Registration Statement on Form A-2 (No. 2-4357); (vii)
Exhibit B-1(l), filed with Steel Company's Current Report on Form
8-K for the month of January, 1945; (viii) Exhibit 1, filed with
Steel Company's Current Report on Form 8-K for the month of
November, 1946; (ix) Exhibit 1, filed with Steel Company's
Current Report on Form 8-K for the months of July and August,
1948; (x) Exhibits B and C, filed with Steel Company's Current
Report on Form 8-K for the month of March, 1952; (xi) Exhibit A,
filed with Steel Company's Current Report on Form 8-K for the
month of July, 1956; (xii) Exhibit A, filed with Steel Company's
Current Report on Form 8-K for the month of July, 1957; (xiii)
Exhibit B, filed with Steel Company's Current Report on Form 8-K
for the month of January, 1959; (xiv) the Exhibit filed with
Steel Company's Current Report on Form 8-K for the month of
December, 1967; (xv) the Exhibit filed with Steel Company's
Current Report on Form 8-K for the month of April, 1969; (xvi)
the Exhibit filed with Steel Company's Current Report on Form 8-K
for the month of July, 1970; (xvii) the Exhibit filed with the
amendment on Form 8 to Steel Company's Current Report on Form 8-K
for the month of April, 1974; (xviii) Exhibit B, filed with Steel
Company's Current Report on Form 8-K for the month of September,
1975; (xix) Exhibit B, filed with Steel Company's Current Report
on Form 8-K for the month of January, 1977; (xx) Exhibit C, filed
with Steel Company's Current Report on Form 8-K for the month of
February, 1977; (xxi) Exhibit B, filed with Steel Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1978; (xxii) Exhibit B, filed with Steel Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1980; (xxiii)
Exhibit 4-D, filed with Steel Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1980; (xxiv) Exhibit
4-D, filed with Steel Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1982; (xxv) Exhibit 4-E, filed
with Steel Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1983; (xxvi) Exhibit 4(i) filed with the
Steel Company's Registration Statement on Form S-2 (No.
33-43393); and (xxvii) Exhibit 4 filed with Steel Company's
Current Report on Form 8-K dated June 23, 1993. --
4.H Copy of consolidated reprint of First Mortgage Indenture,
dated April 1, 1928, between Inland Steel Company and First Trust
and Savings Bank and Melvin A. Traylor, as Trustees, as amended
and supplemented by all supplemental indentures thereto, to and
including the Thirteenth Supplemental Indenture. (Filed as
Exhibit 4-E to Form S-1 Registration Statement No. 2-9443, and
incorporated by reference herein.) --
[The registrant hereby agrees to provide a copy of any other
agreement relating to long-term debt at the request of the
Commission.]
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
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<S> <C> <C>
10.A* Copy of Inland Steel Industries, Inc. Annual Incentive Plan, as amended. (Filed as
Exhibit 10.A to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, and incorporated by reference herein.) --
10.B* Copy of Inland Steel Industries, Inc. Special Achievement Award Plan. (Filed as
Exhibit 10-I to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1987, and incorporated by reference herein.) --
10.C* Copy of Inland 1984 Incentive Stock Plan, as amended. **
10.D* Copy of Inland 1988 Incentive Stock Plan, as amended. **
10.E* Copy of Inland 1992 Incentive Stock Plan, as amended. **
10.F* Copy of Inland Steel Industries Non-Qualified Thrift Plan, as amended. (Filed as
Exhibit 10-H to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, and incorporated by reference herein.) --
10.G* Copy of Inland 1992 Stock Plan for Non-Employee Directors. (Filed as Exhibit B to the
Company's definitive Proxy Statement dated March 16, 1992 that was furnished to
stockholders in connection with the annual meeting held April 22, 1992, and incorporated
by reference herein.) --
10.H* Copy of Inland Steel Industries Supplemental Retirement Benefit Plan for Covered
Employees, as amended. (Filed as Exhibit 10.I to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993, and incorporated by reference herein.) --
10.I* Copy of Inland Steel Industries Special Retirement Benefit Plan for Covered Employees, as
amended. (Filed as Exhibit 10.J to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 and incorporated by reference herein.) --
10.J* Copy of the Inland Steel Industries Deferred Compensation Plan for Certain Employees, as
amended. **
10.K* Copy of Inland Steel Industries Deferred Compensation Plan for Directors, as amended. (Filed
as Exhibit 10-L to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, and incorporated by reference herein.) --
10.L* Copy of Inland Steel Industries Director Retirement Plan. (Filed as Exhibit 10.M to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and
incorporated by reference herein.) --
10.M* Copy of Outside Directors Accident Insurance Policy. (Filed as Exhibit 10-F to Inland Steel
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1983, and
incorporated by reference herein.) --
</TABLE>
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* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to the Company's Annual Report of Form 10-K.
** Previously included in Registrant's Annual Report on Form 10-K for 1994,
as originally filed.
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<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
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<S> <C> <C>
10.N(1)* Copy of form of Severance Agreement dated June 28, 1989 between the Company and
each of the seven executive officers of the Company identified on the exhibit relating to
terms and conditions of termination of employment following a change in control of the
Company. (Filed as Exhibit 10-O-(1) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1989, and incorporated by reference herein.) --
10.N(2)* Amended listing of executive officers of the Company who are parties to the form of
Severance Agreement dated June 28, 1989 in Exhibit 10.N(1) hereof. **
10.N(3)* Copy of Severance Agreement dated June 28, 1989 between the Company and Judd R.
Cool. (Filed as Exhibit 10-O-(2) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989, and incorporated by reference herein.) --
10.N(4)* Copy of Severance Agreement dated September 4, 1990 between the Company and H.
William Howard. (Filed as Exhibit 10-M-(5) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990, and incorporated by reference
herein.) --
10.N(5)* Copy of Severance Agreement dated June 26, 1991 between the Company and Earl L.
Mason. (Filed as Exhibit 10-X to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1991, and incorporated by reference herein.) --
10.N(6)* Copy of Severance Agreement dated November 27, 1991 between the Company and
Maurice S. Nelson, Jr. (Filed as Exhibit 10-O-(6) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992, and incorporated by reference
herein.) --
10.N(7)* Copy of Severance Agreement dated March 23, 1994 between the Company and Vicki
L. Avril. (Filed as Exhibit 10.O(8) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, and incorporated by reference herein.) --
10.N(8)* Copy of Employment Agreement dated April 8,1994 between the Company and Neil S. Novich. **
10.N(9)* Copy of Severance Agreement dated April 8, 1994 between the Company and Neil S. Novich. **
10.O(1)* Copy of letter to Judd R. Cool dated September 2, 1987 relating to terms and
conditions of employment. (Filed as Exhibit 10-K to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1987, and incorporated by reference
herein.) --
10.O(2)* Copy of letter agreement dated November 23, 1987 between the Company and Judd R.
Cool. (Filed as Exhibit 10-L to the Company's Annual Report an Form 10-K for the
fiscal year ended December 31, 1987, and incorporated by reference herein.) --
</TABLE>
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* Management contract or compensatory plan or arrangement required to
be filed as an exhibit to the Company's Annual Report on Form 10-K.
** Previously included in Registrant's Annual Report on Form 10-K for
1994, as originally filed.
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<PAGE> 8
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
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<S> <C> <C>
10.O(3)* Copy of letter agreement dated December 10, 1993 between the Company and Judd R.
Cool restating certain provisions of the September 2, 1987 and November 23, 1987
letters in Exhibits 10.O.(1) and (2). (Filed as Exhibit 10.P.(3) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and
incorporated by reference herein.) --
10.P* Copy of letter to H. William Howard dated July 17, 1990 relating to terms and
conditions of employment. (Filed as Exhibit 10-P to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1990, and incorporated by reference
herein.) --
10.Q* Copy of letter to Earl L. Mason dated May 17, 1991 relating to terms and conditions of
employment. (Filed as Exhibit 10-W to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1991, and incorporated by reference herein.) --
10.R* Copy of letter to Maurice S. Nelson, Jr. dated March 26, 1993 relating to supplemental
pension arrangement. (Filed as Exhibit 10-S to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, and incorporated by reference
herein.) --
10.S* Copy of Letter of Credit with respect to the Supplemental and Special Retirement Benefit
Plan obligations of the Company to W. Gordon Kay. (Filed as Exhibit 10.T to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and incorporated
by reference herein.) --
10.T Copy of Stock Purchase Agreement, dated as of July 7, 1989, between the Company and
Harris Trust and Savings Bank, as ESOP Trustee. (Filed as Exhibit 4-G to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1989, and incorporated by
reference herein.) --
10.U(1) Copy of Letter Agreement dated December 18, 1989 among the Company, Nippon Steel Corporation
and NS Finance III, Inc. (an indirectly wholly owned subsidiary of Nippon Steel Corporation)
relating to sale to NS Finance III, Inc. of 185,000 shares of Series F Exchangeable
Preferred Stock of the Company. (Filed as Exhibit 4(b) to the Company's Current Report on
Form 8-K filed on December 18, 1989, and incorporated by reference herein.) --
10.U(2) Copy of Steel Technology Agreement dated as of July 14, 1989 between Inland Steel Company and
Nippon Steel Corporation relating to technology sharing between the signatories. (Filed as
Exhibit 10-S-(2) to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, and incorporated by reference herein.) --
10.U(3) Copy of Basic Agreement dated as of July 21, 1987 between the Company and Nippon Steel
Corporation relating to the I/N Tek joint venture. (Filed as Exhibit 10-S-(3) to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1989, and incorporated by reference herein.) --
</TABLE>
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* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to the Company's Annual Report on Form 10-K.
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<PAGE> 9
<TABLE>
<CAPTION>
EXHIBIT Sequential
NUMBER DESCRIPTION Page No.
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<S> <C> <C>
10.U(4) Copy of Partnership Agreement dated as of July 21, 1987 between ISC Tek, Inc. (an
indirectly wholly owned subsidiary of the Company) and NS Tek, Inc. (an indirectly
wholly owned subsidiary of Nippon Steel Corporation) relating to the I/N Tek joint
venture. (Filed as Exhibit 10-S-(4) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989, and incorporated by reference herein.) --
10.U(5) Copy of Basic Agreement dated as of September 12, 1989 between the Company and Nippon
Steel Corporation relating to the I/N Kote joint venture. (Filed as Exhibit 10-S-(5)
to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1989, and incorporated by reference herein.) --
10.U(6) Copy of Partnership Agreement dated as of September 12, 1989 between ISC Kote, Inc.
(an indirectly wholly owned subsidiary of the Company) and NS Tek, Inc. (an indirectly
wholly owned subsidiary of Nippon Steel Corporation) relating to the I/N Kote joint
venture. (Filed as Exhibit 10-S-(6) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1989, and incorporated by reference herein.) --
10.U(7) Copy of Substrate Supply Agreement dated as of September 12, 1989 between Inland Steel
Company and I/N Kote, an Indiana general partnership. (Filed as Exhibit 10-S-(7) to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1989, and incorporated by reference herein.) --
10.U(8) First Amendment to Substrate Supply Agreement dated as of May 1, 1990 between Inland Steel
Company and I/N Kote relating to the I/N Kote joint venture. (Filed as Exhibit 10-R-(8) to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990, and
incorporated by reference herein.) --
10.U(9) Letter Agreement dated as of May 1, 1990 among I/N Kote, the Company and Nippon Steel
Corporation relating to partner loans. (Filed as Exhibit 10-R-(9) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1990, and incorporated
by reference herein.) --
10.U(10) First Amendment to I/N Kote Basic Agreement dated as of May 1, 1990 between the Company
and Nippon Steel Corporation relating to the I/N Kote joint venture. (Filed as Exhibit
10-R-(10) to the Company's Annual Report on Form 10-K for the fiscal year ended --
December 31, 1990, and incorporated by reference herein.)
10.U(11) Letter Agreement dated as of April 19, 1990 between the Company and Nippon Steel Corporation
relating to capital contributions to I/N Tek. (Filed as Exhibit 10-R-(11) to Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1990, and incorporated by
reference herein.) --
10.U(12) Letter Agreement dated April 20, 1990 between ISC Tek, Inc. (an indirectly wholly owned
subsidiary of the Company) and NS Tek, Inc. (an indirectly wholly owned subsidiary of
Nippon Steel Corporation) relating to amendment of the partnership agreement of
I/N Tek. (Filed as Exhibit 10-R-(12) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, and incorporated by reference herein.) --
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
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<S> <C> <C>
10.U(13) CCM Override Amendment dated as of April 20, 1990 among the Company,
Nippon Steel Corporation; Inland Steel Company; ISC Tek, Inc.; I/N
Tek; NS Sales, Inc.; and NS Tek, Inc. relating to I/N Tek. (Filed as
Exhibit 10-R-(13) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, and incorporated by reference herein.) --
10.V Copy of ESOP Stock Purchase Agreement, dated May 30, 1990, between the Company
and Harris Trust and Savings Bank, as ESOP Trustee. (Filed as Exhibit 10-T to the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990, and
incorporated by reference herein.) --
10.W Copy of Inland Steel Industries Thrift Plan ESOP Trust, dated July 7, 1989, between
the Company and Harris Trust and Savings Bank, as ESOP Trustee. (Filed as Exhibit 10-P
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1989, and incorporated by reference herein.) --
10.X Letter Agreement dated March 1, 1991 between Nippon Steel Corporation and the Company
regarding Series F Exchangeable Preferred Stock. (Filed as Exhibit 10-U to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1990, and incorporated
by reference herein.) --
10.Y Letter Agreement dated May 10, 1991 by and between Nippon Steel Corporation and Inland
Steel Industries, Inc. relating to Letter Agreement dated December 18, 1989. (Filed as
Exhibit 10-V to the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1991, and incorporated by reference herein.) --
11 Statement of Earnings per Share of Common Stock. **
13 Information incorporated by reference from Annual Report to Stockholders for the fiscal year
ended December 31, 1994. **
21 List of certain subsidiaries of the Company. **
23 Consent of Independent Accountants, appearing on Page 27 of this Annual Report on Form 10-K. **
23.A Consent of Independent Accountants........................................................
24 Powers of attorney. **
27 Financial Data Schedules. **
99 Letter to stockholders of common stock of the Company dated December 22, 1987 explaining
Stockholder Rights Plan adopted by Board of Directors on November 25, 1987. (Filed as
Exhibit 3 to the Company's Current Report on Form 8-K filed on December 18, 1987, and
incorporated by reference herein.) --
99.A Inland Steel Industries Thrift Plan Financial Statements and Supplemental Schedules for the
fiscal year ended December 31, 1994 ......................................................
</TABLE>
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** Previously included in Registrant's Annual Report on Form 10-K
for 1994, as originally filed.
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<PAGE> 1
EXHIBIT 23.A
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-32504 and Post-Effective Amendment No. 1 to Form
S-8 Registration Statement (No. 33-1329) of Inland Steel Industries, Inc. of
our report dated June 19, 1994 appearing on pages 1-2 of Exhibit 99.A to the
1994 Annual Report on Form 10-K of Inland Steel Industries, Inc., filed with
this Form 10K/A.
PRICE WATERHOUSE LLP
Chicago,
June 19, 1995
<PAGE> 1
EXHIBIT 99.A
INLAND STEEL INDUSTRIES THRIFT PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1994
<PAGE> 2
INLAND STEEL INDUSTRIES THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of independent accountants 1-2
Financial statements:
Statements of net assets available
for plan benefits at December 31,
1994 and 1993 3
Statement of changes in net assets
available for plan benefits for the
year ended December 31, 1994 4
Statement of changes in net assets
available for plan benefits for the
year ended December 31, 1993 5
Notes to financial statements 6-16
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
June 19, 1995
To the Board of Directors of
Inland Steel Industries, Inc.
and the Participants in the
Inland Steel Industries
Thrift Plan
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the net assets available for plan
benefits of the Inland Steel Industries Thrift Plan at December 31, 1994 and
1993, and the changes in net assets available for plan benefits for the years
then ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note 3 to the financial statements, the Plan maintains an
unallocated investment contract with Mutual Benefit Life Insurance Company. In
July 1991, the New Jersey Commissioner of Insurance obtained court approval to
place that insurance company in state rehabilitation, thereby seizing its
assets and suspending further policy withdrawals and redemptions pending
completion of a rehabilitation plan. In November 1993, a rehabilitation plan
was approved by the courts. In accordance with the rehabilitation plan, in
March 1994, certain participants of the plan elected to withdraw their
proportionate interests in the Mutual Benefit investment contract at a rate of
55 percent of original contract value, plus accrued interest. The loss
incurred as a result of these withdrawals has been recorded in the accompanying
financial statements in 1993. Because the Plan expects to ultimately fully
realize the remaining portion of the Mutual Benefit investment contract, no
provision for any reduction of the carrying value of the contract related to
participants who did not elect to withdraw from the contract has been made in
the accompanying financial statements.
As discussed in Note 4 to the financial statements, the Plan maintains an
unallocated insurance contract with Confederation Life Insurance Company. In
August 1994, the Canadian and Michigan insurance regulatory authorities filed
an order of rehabilitation against that insurance company, thereby seizing its
assets pending completion of a rehabilitation plan. The amount of any
potential loss relating to this contract cannot be determined at present. No
provision for any potential reduction of the principal amount of the contract
or accrued interest for the year ended December 31, 1994 has been made in the
accompanying financial statements.
<PAGE> 4
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Fund Information in the statement
of changes in net assets available for plan benefits is presented for purposes
of additional analysis rather than to present the changes in net assets
available for plan benefits of each fund. Such information has been subjected
to the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
2
<PAGE> 5
INLAND STEEL INDUSTRIES THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN
BENEFITS AT DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
---- ----
Assets
------
<S> <C> <C>
Investments:
Inland Steel Industries Common Stock Fund:
Inland Steel Industries common stock
(635,609 shares and 606,460, respectively) $ 22,325,766 $ 20,240,603
Cash 855,098 871,386
------------ ------------
23,180,864 21,111,989
------------ ------------
Inland Steel Industries Series E ESOP
Shares allocated to participants
(1,034,800 shares and 804,830 shares
at December 31, 1994 and 1993, respectively) 50,285,098 39,109,856
Unallocated shares (2,067,753 shares
and 2,309,740 shares at December 31,
1994 and 1993, respectively) 100,480,381 112,239,509
------------ ------------
150,765,479 151,349,365
------------ ------------
Stable Value Fixed Income Fund:
Unallocated insurance contracts 251,542,074 240,325,250
Pooled investment funds 8,590,711 10,711,817
------------ ------------
260,132,785 251,037,067
------------ ------------
Mutual Benefit Fund (Note 3) 13,013,878 18,364,180
Fidelity U.S. Equity Index Portfolio 35,501,255 38,019,060
Fidelity Retirement Government Money Market 5,360,201 5,905,300
Fidelity Asset Manager 55,075,936 61,470,781
Fidelity Magellan Fund 46,305,051 42,615,950
------------ ------------
Total investments 589,335,449 589,873,692
------------ ------------
Loans receivable from participants 13,388,965 14,047,087
Employer contributions receivable 14,317 269,460
Cash held by ESOP Trust (Note 6) 5,942,839 5,827,871
Cash - 37,862
------------ ------------
Total assets 608,681,570 610,055,972
------------ ------------
Liabilities
-----------
Notes Payable of ESOP Trust (Note 6) 123,563,123 131,250,460
Interest payable 5,260,614 5,565,581
Accrued administrative expenses 30,228 99,737
------------ ------------
Total liabilities 128,853,965 136,915,778
------------ ------------
Net assets available for plan benefits $479,827,605 $473,140,194
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
INLAND STEEL INDUSTRIES THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Retirement
Mutual Stable Value Government U.S. Equity
Benefit Fixed Income Money Market Asset Index
Fund Fund Portfolio Manager Portfolio
---- ---- --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Sources of net assets:
Employee contributions - $ 6,354,340 $ 275,937 $ 3,403,046 $ 2,266,789
Employer contributions - - - - -
Interfund transfers $(5,852,078) 8,405,693 (299,572) (2,792,430) (3,338,557)
Loan principal repayments - 3,101,227 121,787 1,279,185 876,053
Investment income
Interest and dividend income 501,776 16,706,303 213,253 2,263,509 1,121,264
Realized gain (loss) - - - (628,338) (73,883)
Unrealized gain (loss) - - - (5,745,401) (668,582)
----------- ----------- --------- ----------- -----------
Total investment income 501,776 16,706,303 213,253 (4,110,230) 378,799
----------- ----------- --------- ----------- -----------
Total sources of net assets (5,350,302) 34,567,563 311,405 (2,220,429) 183,084
----------- ----------- --------- ----------- -----------
Application of net assets:
Withdrawals - 21,970,431 775,951 3,046,867 1,833,365
Loans issued - 3,399,117 80,392 1,126,249 866,575
Interest expense - Notes payable - - - - -
Management fees - 102,297 161 1,300 949
----------- ----------- --------- ----------- -----------
Total application of net assets - 25,471,845 856,504 4,174,416 2,700,889
----------- ----------- --------- ----------- -----------
Increase (decrease) in net assets $(5,350,302) $ 9,095,718 $(545,099) $(6,394,845) $(2,517,805)
=========== =========== ========= =========== ===========
Net assets available for plan
benefits:
Beginning of year
End of year
<CAPTION>
ESOP
Common Preferred
Magellan Stock Stock Loan
Fund Fund Fund Fund Total
---- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C>
Sources of net assets:
Employee contributions $3,458,279 $ 279,931 - - $ 16,038,322
Employer contributions - 374,422 $ 9,063,861 - 9,438,283
Interfund transfers 3,464,099 786,791 (373,946) - -
Loan principal repayments 1,291,355 120,637 - $(6,790,244) -
Investment income
Interest and dividend income 1,804,977 - 11,104,569 - 33,715,651
Realized gain (loss) (327,807) 587,463 - - (442,565)
Unrealized gain (loss) (2,348,390) 966,953 - - (7,795,420)
---------- ---------- ----------- ----------- ------------
Total investment income (871,220) 1,554,416 11,104,569 - 25,477,666
---------- ---------- ----------- ----------- ------------
Total sources of net assets 7,342,513 3,116,197 19,794,484 (6,790,244) 50,954,271
---------- ---------- ----------- ----------- ------------
Application of net assets:
Withdrawals 2,484,943 895,909 1,807,071 647,129 33,461,666
Loans issued 1,159,560 147,358 - (6,779,251) -
Interest expense - Notes payable - - 10,678,869 - 10,678,869
Management fees 8,909 4,055 8,654 - 126,325
---------- ---------- ----------- ----------- ------------
Total application of net assets 3,653,412 1,047,322 12,494,594 (6,132,122) 44,266,860
---------- ---------- ----------- ----------- ------------
Increase (decrease) in net assets $3,689,101 $2,068,875 $ 7,299,890 $ (658,122) 6,687,411
========== ========== =========== ===========
Net assets available for plan
benefits:
Beginning of year 473,140,194
------------
End of year $479,827,605
============
</TABLE>
-4-
The accompanying notes are an integral part of these statements.
<PAGE> 7
INLAND STEEL INDUSTRIES THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Fixed Retirement
Income Equity Mutual Stable Value Government
Investment Investment Benefit Fixed Income Money Market
Fund Fund Fund Fund Portfolio
---- ---- ---- ----- ---------
<S> <C> <C> <C> <C> <C>
Sources of net assets:
Employee contributions $ 6,483,853 $ 1,533,955 $ - $ 3,494,655 $ 119,541
Employer contributions
Interfund transfers 1,391,586 2,003,102 (327,523) (94,646,313) 6,071,980
Conversion transfers (Note 1) (341,592,856) (39,316,119) 341,592,856
Investment income
Interest and dividend income 10,996,834 108,945 1,890,221 9,467,127 50,423
Realized gain 2,653,195
Unrealized gain (loss)
------------ ----------- ---------- ------------ ----------
Total investment income 10,996,834 2,762,140 1,890,221 9,467,127 50,423
------------ ----------- ---------- ------------ ----------
Total sources of net assets (322,720,583) (33,016,922) 1,562,698 259,908,325 6,241,944
------------ ----------- ---------- ------------ ----------
Application of net assets:
Withdrawals 21,391,710 394,995 8,621,658 358,350
Forfeited shares withdrawn from
the Plan (Note 1)
Interest expense - Notes payable
Management fees 34,308 64,199 116,895 38
Loss on opt-out election (Note 3) 4,598,422
------------ ------------ ---------- ------------ ----------
Total applications of net
assets 21,426,018 459,194 4,598,422 8,738,553 358,388
------------ ------------ ---------- ------------ ----------
Increase (decrease) in net assets
available for plan benefits $(344,146,601) $(33,476,116) $(3,035,724) $251,169,772 $5,883,556
============ ============ ========== ============ ==========
Net assets available for plan
benefits:
Beginning of year
End of year
<CAPTION>
ESOP
U.S. Equity Common Preferred
Asset Index Magellan Stock Stock
Manager Portfolio Fund Fund Fund Total
------- --------- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Sources of net assets:
Employee contributions $ 1,518,503 $ 1,195,175 $ 1,434,802 $ 207,693 $ - $ 15,988,177
Employer contributions 372,840 8,213,009 8,585,849
Interfund transfers 56,591,158 (3,999,405) 40,714,018 (6,982,654) (815,949) -
Conversion transfers (Note 1) 39,316,119 -
Investment income
Interest and dividend income 2,375,531 857,950 2,353,419 8,266 10,986,638 39,095,354
Realized gain 316,176 1,151,047 378,532 136,758 4,635,708
Unrealized gain (loss) 1,476,019 2,120 (2,028,141) 7,213,153 6,663,151
------------ ----------- ----------- ---------- ----------- ------------
Total investment income 4,167,726 2,011,117 703,810 7,358,177 10,986,638 50,394,213
------------ ----------- ----------- ---------- ----------- ------------
Total sources of net assets 62,277,387 38,523,006 42,852,630 956,056 18,383,698 74,968,239
------------ ----------- ----------- ---------- ----------- ------------
Application of net assets:
Withdrawals 827,063 644,108 292,510 1,166,410 1,807,354 35,504,158
Forfeited shares withdrawn from
the Plan (Note 1) 5,545 5,545
Interest expense - Notes payable 11,275,298 11,275,298
Management fees 2,773 188 1,347 1,131 1,710 222,589
Loss on opt-out election (Note 3) 4,598,422
------------ ----------- ----------- ---------- ----------- ------------
Total applications of net
assets 829,836 644,296 293,857 1,173,086 13,084,362 51,606,012
------------ ----------- ----------- ---------- ----------- ------------
Increase (decrease) in net assets
available for plan benefits $61,447,551 $37,878,710 $42,558,773 $( 217,030) $ 5,299,336 23,362,227
============ ============ =========== ========== =========== ============
Net assets available for plan
benefits:
Beginning of year $449,777,967
------------
End of year $473,140,194
============
</TABLE>
- 5 -
The accompanying notes are an integral part of these statements.
<PAGE> 8
INLAND STEEL INDUSTRIES THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
NOTE 1 -- DESCRIPTION OF THE PLAN:
The Inland Steel Industries Thrift Plan ("Plan") is a defined contribution
profit sharing (thrift-savings) plan which is available to all salaried,
nonbargaining unit employees of Inland Steel Industries, Inc. ("Company") and
certain of its subsidiaries and affiliates (the Company, the subsidiaries, and
its affiliates collectively referred to as "Employers"). The Plan, which is
subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), was adopted effective January 1, 1975. In 1989,
the Company amended the Plan to include an Employee Stock Ownership Plan
("ESOP"), effective January 1, 1990. As described below, the Plan was amended
and restated as of July 1, 1993.
Employees electing to participate in the Plan may contribute up to fifteen
percent of their base salary. Participants have the option of making
contributions on a before-tax (limited to ten percent of base salary) and/or
after-tax basis. The first five percent of participants' contributions (the
"basic contribution") are matched as follows by the Employers: A participant
that is an employee of the Company or its participating subsidiaries receives
an allocation to his ESOP account of shares of Company Series E ESOP
Convertible Preferred Stock ("Series E Preferred Stock") and, under certain
circumstances, Company common stock, with a fair market value equal to such
participant's basic contribution. Because employees of I/N Tek and I/N Kote
(joint venture partnerships owned by subsidiaries of the Company and Nippon
Steel Corporation) are not permitted by law to participate in the ESOP portion
of the Plan, employer matching contributions for these employees are made in
cash, which is then invested in Company common stock and credited to each
participant's Inland Steel Industries Stock Fund ("Common Stock Fund") account.
For purposes of determining the number of shares to be contributed to
participant accounts, effective July 1, 1993, Company common stock is valued at
the closing price per share on the New York Stock Exchange - Composite
Transactions on the last day such stock was traded prior to the date of
contribution. Previously, the common stock was valued at the average of the
highest and lowest selling prices per share on the New York Stock Exchange --
Composite Transactions on the last day such stock was traded in the month for
which the contribution was made. The Series E Preferred Stock is currently
valued at $48.594 per share, as
- 6 -
<PAGE> 9
determined at least annually by an independent appraiser, plus
accrued dividends.
Through June 30, 1993 participants were required to designate the investment of
their contributions in integral multiples of twenty-five percent in any of the
Fixed Income Investment Fund, the Equity Investment Fund or the Common Stock
Fund. Effective July 1, 1993, participants can designate the investment of
their contributions in integral multiples of 1% in any of the Fidelity
Retirement Government Money Market Portfolio, Stable Value Fixed Income Fund,
Fidelity U.S. Equity Index Portfolio, Fidelity Asset Manager, Fidelity Magellan
Fund or the Inland Steel Industries Stock Fund. Individual participant
accounts are maintained for each investment fund as well as for individual ESOP
accounts to record participant contributions, employer matching contributions,
investment appreciation or depreciation, dividends and interest income.
Dividends on shares of Company common stock and Series E Preferred Stock that
have been allocated to individual participant accounts are credited to
participant accounts in the form of additional shares of stock.
Participants vest immediately in their contributions and the earnings thereon.
Participants with less than five years of vesting service become vested in the
Company's matching contributions twenty-four months after the contributions are
made. Participants become immediately vested in all of the Company's matching
contributions upon the completion of five years of vesting service or upon
termination of employment due to a distributable event, such as retirement,
death, disability or other events as set forth in the Plan. Upon termination
of employment for reasons other than a distributable event, nonvested matching
contributions are forfeited. Nonvested Company contributed Series E Preferred
Stock and Company common stock shares that are forfeited are used to reduce
future contributions by the Company. At December 31, 1994, 6,237 and 456
forfeited shares of Series E Preferred Stock and Company common stock,
respectively, were held by the Plan for future matching contributions.
After a participant's shares of common stock contributed by the Company have
been held for at least twenty-four months, the participant may elect to
reinvest these shares in the Fidelity Retirement Government Money Market
Portfolio, Stable Value Fixed Income Fund, Fidelity Asset Manager, Fidelity U.S.
Equity Index Portfolio, or Fidelity Magellan Fund. Participants who have
reached the age of fifty-nine and one-half years or who have become subject to
certain distributable events may, at any time, transfer amounts allocated to
their individual ESOP accounts or shares of common stock contributed by the
Company to these other investment funds, subject to certain restrictions.
- 7 -
<PAGE> 10
Participants may withdraw their contributions and the earnings thereon, subject
to certain limitations set forth in the Plan. Certain withdrawals are subject
to federal and state income taxes and penalties as required by the Internal
Revenue Service ("IRS").
Participants may borrow up to fifty percent of or $50,000 of their vested
balance, whichever is less (subject to certain limitations set forth in the
Plan), excluding their investment in the Mutual Benefit Fund (see Note 3 -
Mutual Benefit Fund), for terms not exceeding five years, subject to
acceleration under certain circumstances. The interest rate charged on loans
is based upon a nationally published prime rate in effect at the beginning of
the month in which the loan application is accepted.
Participants are entitled to a distribution of all vested amounts upon
termination of employment with the Company. Participants may elect to receive
a lump sum payment or, under certain circumstances set forth in the Plan,
installment payments, starting no later than April 1 of the year following the
attainment of age seventy and one-half years. Participants receiving
distributions from the Common Stock Fund or from their ESOP accounts may elect
to receive such distributions in the form of whole shares of common stock, with
fractional shares distributed in cash, or entirely in cash. Amounts
attributable to a participant's interest in all other funds are distributed in
cash.
Each participant has the right to confidentially direct the ESOP trustee to
vote the shares of the Company's common stock and Series E ESOP Preferred Stock
that have been allocated to the participant's accounts, whether or not vested.
All undirected and unallocated shares are voted by the ESOP trustee in the same
proportion as the shares actually directed by participants. All shares of
Company stock in the Plan which are not allocated to participants' accounts
will be tendered in proportion to the tender offer instructions made and deemed
to be made by participants.
Description of the Series E Preferred Stock
Shares of Series E Preferred Stock entitle holders to cumulative annual
dividends of $3.523 per share, payable semi-annually. The Series E shares are
convertible at the option of the holder into shares of the Company's common
stock on a one-for-one basis, subject to certain adjustments. The Company may,
at its option, redeem all or any portion of the Series E Preferred Stock at
specified prices, but not less than $48.594 per share, plus all accrued and
unpaid dividends to the redemption date. Holders of Series E Preferred Stock
would be entitled to
- 8 -
<PAGE> 11
preference on distribution of Company assets over holders of Company common
stock or any other class or series of stock junior to the Series E Preferred
Stock.
Administration
The Plan is administered by the Inland Steel Industries Thrift Plan Committee
("Committee"), which consists of certain officers of the Company appointed by
the Company's Board of Directors. Through June 30, 1993, the Committee members
were also designated as Trustees of the Plan and the Equitable Life Assurance
Society of the United States ("Equitable") and State Street Bank and Trust
Company ("State Street") acted as investment managers of the Equity Investment
Fund and Fixed Income Investment Fund, respectively. The Harris Trust and
Savings Bank ("Harris Bank") is the trustee of the Common Stock Fund and ESOP
Preferred Stock Fund.
The Plan was amended and restated effective July 1, 1993 to, among other
things, provide for a new trustee and investment manager and to change certain
investment options and operations of the Plan. The Board of Directors of the
Company appointed Fidelity Management Trust Company ("Fidelity") as a Trustee
under the Plan with responsibility for administering, holding and investing
certain assets of the Plan. Harris Bank has continued as the trustee of the
Common Stock Fund and ESOP Fund. Effective July 1, 1993, all amounts in the
Equity Investment Fund were transferred from Equitable to the Fidelity U.S.
Equity Index Portfolio fund and all amounts in the Fixed Income Investment Fund
were transferred from State Street to the Fidelity Stable Value Fixed Income
Fund. During a Transition Period of July 1, 1993 to September 10, 1993,
investments, withdrawals, loans and distributions under the Plan were subject
to certain rules and restrictions adopted by the Committee, including the
temporary suspension of loans, withdrawals, distributions and changes in
investment elections relating to contributions and account balances. Effective
July 1, 1993, the following additional investment options became available to
participants: the Fidelity Retirement Government Money Market Portfolio, the
Fidelity Asset Manager Fund and the Fidelity Magellan Fund. The costs of
certain administrative and investment services to be provided by Fidelity will
be paid from participants' accounts or assets within the appropriate investment
option, as applicable.
This description summarizes major provisions of the Plan and is provided for
general information purposes only. It does not cover all provisions,
limitations and exclusions of the Plan. A full copy of the Plan and additional
information about the Plan may be requested from the Plan Administrator.
- 9 -
<PAGE> 12
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of accounting
The Plan's financial statements have been prepared on the accrual basis of
accounting.
Investments and investment income
Investments in Inland Steel Industries common stock are valued at the last
reported sales price on the last business day of the year. Inland Steel
Industries Series E Convertible Preferred Stock is currently valued at $48.594
per share, as determined at least annually by an independent appraiser, plus
accrued dividends.
The Stable Value Fixed Income Fund consists of unallocated investment contracts
with various insurance companies and pooled investment funds held by Fidelity.
The unallocated investment contracts earned a fixed rate of return ranging from
2.00 percent to 9.37 percent in 1994 and 1993 and are stated at contract value
plus interest earned to date. The pooled investment funds, which consist of
money market funds, are valued at cost plus interest earned to date, which
approximates market.
See Note 3 and Note 4 for a description of the accounting treatment with
respect to the Mutual Benefit Fund and the Confederation Life contract,
respectively.
The Fidelity U.S. Equity Index Portfolio is a pooled investment fund which
invests in various common stocks. The net assets of this fund are valued at
the closing market price on the last business day of the year for the
individual securities held in the portfolio.
The Fidelity Retirement Government Money Market Portfolio consists of short
term obligations issued or guaranteed by the U.S. Government. The assets in
the fund are stated at cost plus interest, which approximates market value.
The Fidelity Asset Manager Fund is an asset-allocation fund which consists of a
mix of short-term instruments, bonds and equities. The net assets of the fund
are valued at the closing market price on the last business day of the year for
the individual assets held in the portfolio.
The Fidelity Magellan Fund consists of common stock and securities that are
convertible into common stock. The net assets of the fund are valued at the
closing market price on the last business day of the year for the individual
assets held in
- 10 -
<PAGE> 13
the portfolio.
Realized gains and losses on investment transactions are calculated using the
current value method. Under the current value method, realized gains and
losses on investments sold are calculated as sales proceeds less an adjusted
cost representing current value at the beginning of the year or acquisition
cost if acquired during the year.
In accordance with the policy of stating investments at fair market value, the
net unrealized appreciation or depreciation of the market value of investments
for the year, if any, is reflected in the Statement of Changes in Net Assets
Available for Plan Benefits. Unrealized gains or losses are calculated as the
current value of investments held at the end of the year less their current
value at the beginning of the year or acquisition cost if acquired during the
year.
Interest income is accrued as earned, and dividend income is
recorded as of the record date.
Contributions and withdrawals
The Employers must contribute, at a minimum, an amount at least equal to the
principal and interest payments due on the Notes Payable of the ESOP Trust less
any preferred dividends (see Note 6 - Notes Payable). Since these
contributions are used for payments of principal and interest, they are not
allocated to participants' accounts. Contributions are recorded in the period
accrued by the Company.
Withdrawals and transfers are valued as of the close of the
business day in which they occur.
Administrative expenses
Through June 30, 1993, investment management fees for the Fixed Income
Investment Fund and the Equity Investment Fund were paid by the Plan. All
other management fees and all administrative expenses of the Plan were paid by
the Company. With the transition to Fidelity, certain trustee fees, certain
recordkeeping fees and the investment management fees of all funds except the
ESOP Fund and the Common Stock Fund are paid by the Plan. All other management
fees and administrative expenses of the Plan are paid by the Company.
NOTE 3 -- MUTUAL BENEFIT FUND:
The Plan maintains an unallocated investment contract with
- 11 -
<PAGE> 14
Mutual Benefit Life Insurance Company ("Mutual Benefit"). This contract was
initially purchased in January 1989 as an investment of the Fixed Income
Investment Fund. The stated terms of the contract include an interest rate of
8.75 percent per annum, with interest paid annually each December 31, and
scheduled maturities of fifty percent of the contract value at September 30,
1991 and the remaining balance of the contract value plus any unpaid interest
at March 31, 1992.
On July 16, 1991, Mutual Benefit was placed under rehabilitation directed by
New Jersey insurance regulators and policy withdrawals and redemptions were
suspended pending completion of this plan. Consequently, none of the scheduled
maturity payments of the Plan's contract with Mutual Benefit have been
received. Interest on the contract through December 31, 1990 has been
received.
In response to Mutual Benefit being placed under rehabilitation, the Plan was
amended, effective July 1, 1991, to segregate the carrying value of the Mutual
Benefit contract, including accrued interest determined in accordance with the
terms of the Mutual Benefit contract through June 30, 1991, into a separate
fund, called the Mutual Benefit Fund. The amount credited to each
participant's Mutual Benefit account was equal to the participant's
proportionate interest in the carrying value of the Mutual Benefit Fund at June
30, 1991. No contributions, withdrawals, loans or transfers to or from the
Mutual Benefit Fund are permitted, except in certain circumstances as described
below. Loans, withdrawals and transfers are limited to the participants'
vested balances in the Plan, as defined by the Plan, excluding the
participants' balances in the Mutual Benefit Fund.
In 1992, Mutual Benefit implemented an interim relief program to provide for
payments related to death benefits, disability benefits, normal retirement
benefits and hardship. Such payments are calculated based on various
percentages applied to the balance of the Mutual Benefit Fund at the time such
assets were frozen. During the years ended December 31, 1994 and 1993, amounts
totaling $250,883 and $327,523, respectively, were transferred from Mutual
Benefit to the Plan under this program. At December 31, 1994, $187,540 was
held by the Mutual Benefit Fund for future distribution to participants. These
amounts will be allocated to applicable participants' accounts on a pro rata
basis upon distribution.
In November 1993, the Mutual Benefit rehabilitation plan was approved by the
courts and in January 1994, the Plan was finalized. In accordance with the
terms of the rehabilitation plan, during March 1994, Plan participants were
given the option of withdrawing their interests in the Mutual Benefit Fund at a
- 12 -
<PAGE> 15
reduced value (the "opt-out election") or participating in the rehabilitation
plan (the "opt-in election"). Such withdrawal payments were made in September
1994.
Participants choosing the opt-out election were paid 55% of the value of their
interest at July 16, 1991, plus accrued interest on such amount to April 29,
1994 at a rate of 3.5%, less any interim relief benefit payments. Opt-out
election payments were made to participants through a transfer to participant's
Stable Value Fixed Income Fund accounts.
Participants choosing the opt-in election will be entitled to their full
principal balance plus accrued interest, but will not receive any cash
payments, except under certain circumstances, until after the end of the
Rehabilitation Period on December 31, 1999. Opt-in participants will be
credited with the contract interest rate of 8.75 percent for 1991, 4.0 percent
for 1992 and 3.5 percent for both 1993 and 1994. Interest rates for future
years will be determined annually based on the investment results of Mutual
Benefit. Commencing in the year 2000, account balances attributed to opt-in
participants are to be paid out in five equal annual installments. However,
one or more of the installments may be extended up to an additional seven years
if Mutual Benefit does not have sufficient liquidity. Principal and interest
on the Mutual Benefit contract is reinsured by a group of insurance companies
led by Metropolitan Life Insurance Company and Prudential Life Insurance
Company.
It may be possible under the rehabilitation plan for the Plan to withdraw its
participation in the Mutual Benefit contract, however the amounts to be
received from such withdrawal would be based on the liquidation value of Mutual
Benefit assets at that time. Mutual Benefit may also permit individual
participant withdrawals for retired participants, certain hardships, death or
disability. However, the availability and amount of such withdrawals can only
be determined upon the submission of a request to Mutual Benefit and its
subsequent review of that request.
Certain unsecured creditors of Mutual Benefit have challenged the
rehabilitation plan. In the event the courts uphold these challenges, the
rehabilitation plan could be amended and any such amendments could adversely
affect the value of the Mutual Benefit Fund.
Subsequent to the 1993 plan year end, participants representing an aggregate
amount of $10,218,715 (at July 16, 1991 contract value) elected to opt-out of
the Mutual Benefit Fund. The resulting loss of $4,598,422 (45 percent of
contract value) has been reflected in the accompanying financial statements as
a reduction in the carrying value of the Mutual Benefit contract
- 13 -
<PAGE> 16
as of December 31, 1993. The carrying value of the portion of the Mutual
Benefit contract related to the opt-in participants has not been reduced for
any potential loss relating to this contract. At December 31, 1994, the
carrying value of the Mutual Benefit Fund in the accompanying financial
statements reflects the July 16, 1991 contract value, plus accrued interest
through December 31, 1994 under the terms of the rehabilitation plan. The
changes in the carrying value of the Mutual Benefit contract for the years
ended December 31, 1994 and 1993 are summarized as follows:
<TABLE>
<CAPTION>
Opt-in Opt-out Total
------ ------- -----
<S> <C> <C> <C>
July 16, 1991 contract value $11,616,146 $10,218,715 $21,834,861
Loss on opt-out election - (4,598,422) (4,598,422)
Interim relief benefit payments (363,005) (319,335) (682,340)
Accrued interest 1,324,266 485,815 1,810,081
----------- ----------- -----------
December 31, 1993 net book value 12,577,407 5,786,773 18,364,180
----------- ----------- -----------
Opt-out election payments - (5,775,438) (5,775,438)
Interim relief benefit payments - (76,640) (76,640)
Accrued interest 436,471 65,305 501,776
----------- ----------- -----------
December 31, 1994 net book value $13,013,878 $ - $13,013,878
=========== =========== ===========
</TABLE>
NOTE 4 - CONFEDERATION LIFE:
The Plan maintains an unallocated insurance contract with Confederation Life
Insurance Company ("Confederation Life"). This contract was initially
purchased as an investment of the Stable Value Fixed Income Fund in February
1993. The stated terms of the contract include an interest rate of 6.08
percent per annum, with interest paid annually each February, and a scheduled
maturity of January 1, 1998.
In August 1994, following the placement of Confederation Life's Canadian
operations under the regulatory control of the Canadian government, Michigan
insurance regulators filed an order of rehabilitation against the U.S. Branch
of Confederation Life Insurance Company. Michigan insurance regulators are
working with Canadian authorities in supervising the rehabilitation, however, a
plan has not been finalized.
In response to the seizure of Confederation Life, the trustee and investment
manager of the Stable Value Fixed Income Fund (Fidelity) suspended the accrual
of interest for the period August 12, 1994 to August 31, 1994 and, effective
September 1,
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<PAGE> 17
1994, resumed interest accruals at an annual effective rate of 2.00 percent.
The contract was not segregated from the Stable Value Fixed Income Fund and
participants continue to have the right to make contributions, loans,
transfers, and withdrawals to and from this fund.
The carrying value of the Confederation Life contract in the accompanying
financial statements reflects the principal amount of the contract of
$5,000,000 plus accrued interest of $174,323 for the year ended December 31,
1994, in accordance with the terms stated above. This carrying value
represents Fidelity's best estimate of the fair market value of this contract
based on the financial information available, historical precedents and
discussions of likely outcomes with regulators and industry representatives.
Confederation Life's final rehabilitation plan may result in a reduction in the
principal amount of the contract and/or a reduction in the related interest
accrual. However, pending completion of the plan and a full appraisal of the
fair value of Confederation Life's assets and liabilities, the amount of any
potential loss on this contract cannot be reasonably estimated.
NOTE 5 - INVESTMENTS:
All unallocated investment contracts individually represent less
than five percent of the Plan's net assets at December 31, 1994 and 1993.
NOTE 6 - NOTES PAYABLE:
In July 1989, the Company and Inland Steel Company ("ISC"), a wholly owned
subsidiary of the Company, provided loans to the ESOP Trust of $146,913,160 and
$3,086,800, respectively. The ESOP Trust used the proceeds of these loans to
purchase 3,086,800 leveraged shares of Series E Preferred Stock from the
Company. In September 1990, the ESOP Trust refinanced its loan from the
Company through the private placement of notes totaling $146,913,160 with
eighteen lenders. The notes are payable in semi-annual installments through
July 2004, with an initial average interest rate of 8.65 percent per annum, and
are guaranteed by Joseph T. Ryerson & Son, Inc., a wholly owned subsidiary of
the Company. The note due to ISC was repaid in installments during 1990 and
1991.
Interest and principal payments made by the ESOP Trust are funded by dividends
paid by the Company on leveraged shares of the Series E Preferred Stock and
additional contributions made by the Company. From time to time, the Company
elects to provide additional shares of nonleveraged Series E Preferred Stock to
the ESOP Trust to cover employee matching requirements
- 15 -
<PAGE> 18
not covered by the release of shares through scheduled principal and interest
payments by the ESOP Trust on its outstanding notes.
Cash held by the ESOP Trust at December 31, 1994 and 1993 of $5,316,152 and
$5,308,994, respectively, was used for payment of principal and interest due on
the Notes Payable of the ESOP Trust. The remaining cash held by the ESOP Trust
of $626,687 and $518,877 at December 31, 1994 and 1993, respectively, was used
to purchase additional shares of nonleveraged Series E Preferred Stock that
were allocated to participants' accounts.
NOTE 7 - TAX STATUS OF THE PLAN:
On March 6, 1995, the IRS issued a favorable determination letter with respect
to the qualified tax status of the Plan, as amended, as of March 23, 1993. The
Plan has been amended since receiving the determination letter. However, the
Plan administrator and the Plan's tax counsel believe that the Plan is designed
and is currently being operated in compliance with the applicable requirements
of the IRC.
NOTE 8 - PLAN TERMINATION:
The Company anticipates that the Plan will continue, but reserves the right to
terminate the Plan at any time. Upon termination of the Plan, all amounts
allocated to the participants' accounts, including all employer matching
contributions, shall vest immediately. If the ESOP loans are outstanding at
the time of termination, they shall be repaid in full through sale of all
unallocated shares of the Series E Preferred Stock and any remaining proceeds
of such sale shall be allocated to participants' individual ESOP accounts in
proportion to shares credited to their ESOP accounts. The Trustees shall then
direct the method and manner of distribution of the Plan's assets to
participants or their beneficiaries.
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